BRIDGING THE FINANCE GAP

BRIDGING THE FINANCE GAP
Commercial and Industrial (C&I) solar in Africa is still very much a market in its infancy, and yet much of the focus on distributed solar in Sub-Sahara Africa is in this sector, where private developers are starting to flourish and make money to
flow. Self-generation accounts for as much as 20% of installed generation in some sub-Sahara Africa Countries, according to the World Bank, with most businesses heavily reliant on expensive diesel generators and yet still suffering an average of eight power outages a month. However, as the cost of solar PV equipment rapidly declines, the technology is increasingly an attractive-option for businesses. In West Africa, the price of electricity is quite high, you start to see a lot of C&I projects makes economic sense because customers are saving money on a monthly basis on their electricity prices. That’s particularly important for the commercial and industrial companies who pay an exorbitant amount of their costs towards energy, “says Adrea Griffin, vice president of global business development at solar finance business SunFunder. It is not only the falling of PV prices that will help this segment take off, but also developments and innovations in financing and credit – as this has historically posed the biggest barrier. To this end, solar financiers and developers are working to introduce and implement various business models that will serve to widen access to financing, lower transaction costs and raise total investment costs. On-grid versus off-grid The C&I segment typically encompasses solar projects around 200kw-5mw that power businesses, generally in the form of rooftop systems atop commercial and industrial buildings or at mines and farms. It is split into both the off-grid and ongrid market, with both sectors coming with a different business case. On-grid solar plants at business sites make commercial sense in Africa versus more developed markets because these customers are still often using diesel for between 10-20% of their energy because the grid is unreliable. “Even for on-grid customers, we are integrating fuel-save controllers and the ability for solar to work in tandem with the grid and diesel; part of this is not just savings against the grid, but savings against the cost of running the diesel generators, “says Jake Cusack, managing partner at Cross Boundary and Cross Boundary Energy – pioneer investment and economic development consulting firm in C&I.